You write a bad review about a business. You get a letter from a lawyer. That letter says you are being sued for defamation. Your stomach drops. You thought your opinion was protected free speech. Maybe it was. Maybe it was not. The difference comes down to one thing: whether you stated a false fact or just gave your honest opinion. And if that false fact hurt the business’s reputation or bottom line, you could be on the hook for thousands of dollars in damages.

Defamation happens when someone publishes a false statement of fact that harms another person’s or business’s reputation. In the context of product and business reviews, defamation occurs when a reviewer says something untrue and damaging. That can happen in two directions: a customer lies about a bad experience, or a competitor posts a fake negative review to sabotage a rival. Either way, the law treats false factual statements as dangerous—and courts are willing to enforce consequences.

The key word is “fact.” You are legally allowed to hate a product. You can say it is overpriced, ugly, or poorly designed. That is your opinion. Opinions are protected speech under the First Amendment. No court will punish you for saying a restaurant’s food tastes terrible. But if you say the restaurant served raw chicken when it did not, or that the owner has a criminal record when he does not, you have crossed a line. You made a verifiably false statement of fact. That is defamation.

For a false review to be defamatory, three elements must be present. First, the statement must be published—meaning visible to a third party. Posting it on Yelp, Google, or social media counts. Second, it must be false. Truth is an absolute defense. If the review is true, even if it is harsh, it is not defamation. Third, the false statement must cause harm. That harm can be financial, such as lost sales, or reputational, such as damage to the business’s standing in the community.

The level of fault required depends on who you are. If you are an ordinary customer who posts a fake review, you can be sued for negligence if you did not check the facts. If you are a competitor posting a false negative review to steal business, the court may find actual malice—meaning you knew the statement was false or acted with reckless disregard for the truth. Actual malice can lead to punitive damages, which are designed to punish and deter.

Many business owners do not sue over a single bad review because the cost of litigation often exceeds the damage. But that is changing. Courts have awarded significant sums in defamation cases involving fake reviews. For example, a hotel owner won a $360,000 judgment against a guest who falsely claimed the hotel was infested with bedbugs. The guest posted the lie on TripAdvisor. The hotel lost bookings. The court ruled the guest knew the claim was false. The payout covered lost revenue and legal fees.

Fake positive reviews are also dangerous. If a business pays or pressures employees to write glowing reviews that are not true, that business can be sued for defamation by a competitor who suffers harm. The business can also face Federal Trade Commission penalties for deceptive advertising. The FTC has fined companies for posting fake testimonials. While the FTC action is not a defamation lawsuit, it is a legal liability that carries its own serious consequences.

Another risk comes from online platforms. Under Section 230 of the Communications Decency Act, websites that host user reviews are generally not liable for what users post. But the person who writes the review is fully liable. You cannot blame Yelp or Google for a defamatory review you wrote. You are the publisher of the false statement. And if the platform removes the review after a court order, that does not erase your liability for the harm already done.

What should you do if you are accused of posting a defamatory review? First, do not panic. Check whether the statement you made is actually false. If you can prove it is true, you are safe. If you cannot, retract the review immediately and apologize. Courts look more favorably on defendants who act quickly to correct errors. If you are the business owner who was harmed by a fake review, document everything. Save screenshots, collect evidence of lost revenue, and consult an attorney before sending a demand letter. A well-drafted cease-and-desist letter often resolves the matter without a lawsuit.

The bottom line is simple. Fake reviews are not just unethical. They are legally dangerous. Whether you are a customer exaggerating a minor annoyance or a competitor running a smear campaign, posting a false factual statement can cost you real money. Stick to your honest opinions. Check your facts before hitting publish. And if you cannot say something true, do not say anything at all.